Digital Disruption – myths and realities

What are the myths and realities about digital disruption? AXELOS attended the recent British Quality Foundation event, Digital Disruption – is it business as usual, and this is a summary of London Business School professor, Julian Birkinshaw’s analysis of current digital disruption thinking:

Digital disruption is about new business models in existing industries, playing by a different set of rules and potentially undermining existing profits of incumbent companies.

Among the world’s top ten listed companies, seven of them are “platform companies” (e.g. Apple, Google, Facebook) which have increasing returns to scale and are able to create new sources of value. All of them are disruptors.

But what are the myths about digital disruption?

Myth 1: Every industry faces disruption

Most business leaders expect their business and sector to be disrupted. However, the process takes time: in 2015 Anthony Jenkins (then CEO) of Barclays predicted disruption (calling it an “Uber moment”) for the bank. In 2017, he had to backtrack, calling it a “pre-Uber moment” ahead of five years of change.

So, you have to be cautious about overstating disruption and there needs to be real, genuine evidence of it.

Myth 2: Established firms don’t see the iceberg coming and get into trouble

Big companies have people observing the “iceberg” coming. For example, Kodak invented the first digital camera and were smart enough to see digital coming!

At Nokia there were teams of people working on touch screen technology. They missed the boat, but not because they weren’t aware. In 2010, the year that Apple sold 40m iPhones, Nokia sold 453m phones and it was still business as usual.